4 in 10 S'poreans not saving for retirement

[Musicwhiz]

Two main reasons I can think of off-hand on why Singaporeans do not save or do not save enough; and they are my two pairs of "C"s.

1) Conspicuous Consumption
2) Creature Comforts

1) is to keep up with the Lims and Tans, and is the source of envy among the have-nots for those who possess items which they desire. This causes them to consume for consumption's sake, but do they really need the bling?

As for 2), some people cannot live without their "comforts", which may include a car, air-condition every day,taxi rides to every part of Singapore etc. This all costs money.

[paullow]

What counts as retirement savings? Equities or just pure cash? I can''t imagine someone building up a slush fund of $300,000 in a bank account without at least putting some of it to work.

So I am not sure how these numbers were computed - more information would certainly be helpful!

hi mw,
u will be surprised at the numbers who have high 6figure sum in their banks. as a premier customer, my bank relationship manager told me that the numbers are greater than what most pple think. the real rich buy things in.cash n still have a lot of cash dumped in their accounts.

[NTL]

I think the reason why Singaporean does not have enough savings for retirement or not saving for retirement is due to the fact that the savings have to be deployed/depleted at certain stage of your life (e.g. Buying a property when getting married, having kids etc.). With the high cost of living, it is no wonder that people have little money left for either savings or investment for retirement. Also on the topic of investing for retirement, it could be that people are not comfortable or knowledgeable enough to invest on their own. Having say that, i think that the only way to have a sufficient amount for retirement is to invest early. For the average person with no interest in researching for individual stocks, they can do index fund investing as recommended by Warren Buffet who say the following: “Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees".

For those who are interested to know more about index fund investing, a good article would be: http://www.infobarrel.com/The_Simplified...ndex_Funds
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Other than saving and investing, I believe that apportion of cash is also very important. If whenever I save enough, or realised some gains from investment, then I simply spend it away, there is no way that I can have enough for retirement. I only allow myself to spend up to 20% of my investment gains as "bonus". I always told my friends that saving/investing for retirement is more important than saving/investing for kids' education simply becoz I can borrow for the latter. Banks will not allow me to borrow at low rates to retire.

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What counts as retirement savings? Equities or just pure cash? I can''t imagine someone building up a slush fund of $300,000 in a bank account without at least putting some of it to work.

So I am not sure how these numbers were computed - more information would certainly be helpful!

hi mw,
u will be surprised at the numbers who have high 6figure sum in their banks. as a premier customer, my bank relationship manager told me that the numbers are greater than what most pple think. the real rich buy things in.cash n still have a lot of cash dumped in their accounts.

There are people who are so risk adverse that their only "investment" is FD. Of coz, the 6figure sum could be only part of their 7or8 figure assets.

To MW, I do believe it is based on surveys, and watever the response is. I have a retirement endowment, so I believe it count as part of my retirement savings. Not forgetting, the report is to sell more of such.

[Musicwhiz]

hi mw,
u will be surprised at the numbers who have high 6figure sum in their banks. as a premier customer, my bank relationship manager told me that the numbers are greater than what most pple think. the real rich buy things in.cash n still have a lot of cash dumped in their accounts.

Hi Paul,

I am not surprised actually. From what I read in the news about banks having to cater to more affluent people, and segmenting their products accordingly, this is already evidence of the growing number of HNW people.

What I do not understand is why they would keep several hundred thousand $ in the bank earning a miserly 0.1-0.2% per annum though. Isn't it the RM's responsibility to help them invest this?

To NTL: thanks point noted!

[safetyfirst]

hi mw,
u will be surprised at the numbers who have high 6figure sum in their banks. as a premier customer, my bank relationship manager told me that the numbers are greater than what most pple think. the real rich buy things in.cash n still have a lot of cash dumped in their accounts.

Hi Paul,

I am not surprised actually. From what I read in the news about banks having to cater to more affluent people, and segmenting their products accordingly, this is already evidence of the growing number of HNW people.

What I do not understand is why they would keep several hundred thousand $ in the bank earning a miserly 0.1-0.2% per annum though. Isn't it the RM's responsibility to help them invest this?

To NTL: thanks point noted!

If your net worth is say 10 million, 300k is a miserly 3% of your assets only. The rich will want some liquidity and they probably wont care how much the 300k earns, even if it earns nothing, they would still leave it with the bank

[paullow]

yes, i was just going to type what safetyfirst type.
exactly!

u got 10m in investment n investments have risks. surely keeping 1m as cash is othing less than a prudent way of managing one's wealth.
for me, i will reject all my rm request to 'grow' my sum with the bank.

[Musicwhiz]

yes, i was just going to type what safetyfirst type.
exactly!

u got 10m in investment n investments have risks. surely keeping 1m as cash is othing less than a prudent way of managing one's wealth.
for me, i will reject all my rm request to 'grow' my sum with the bank.

OK thanks guys (Paul and Safetyfirst) for the info.

[violinist]

I see so many people taking taxi, eating in restaurants, buying condos, signing up enrichment courses, changing cars, changing to the latest phones, pads, PCs, how to save?

[CityFarmer]

yes, i was just going to type what safetyfirst type.
exactly!

u got 10m in investment n investments have risks. surely keeping 1m as cash is othing less than a prudent way of managing one's wealth.
for me, i will reject all my rm request to 'grow' my sum with the bank.

OK thanks guys (Paul and Safetyfirst) for the info.

This is the same concept as emergency fund for ordinary people, the only difference is the absolute sum.

[AlphaQuant]

plan early and people should be fine.

the magic of compounding guarantees that.
The CPF returns are floored at 2.5% - $1 at age 30 compounds to $2.373 at age 65, provided people don't do silly things with it.

so to get 150k by 65, one needs 63.2k at age 30. A male starting work at 25 will just need to pump in 12.6k p.a. (so equivalent of 1k per mth) and all should be well. (of cos there's inflation etc but that should be handled separately through another allocation to equities+high yield bonds etc)

unfortunately expensive housing is taking most of these enforced savings away, and with that, the powers of compounding...